1. ABC Pty Ltd presently makes 20,000 units of a certain part to use in production. The cost to make the part is $20 per unit including $15 in variable costs and $5 in fixed overhead applied. If ABC buys the part from a supplier, the cost would be $18 per unit and the released facilities could not be used for any other activity. %77.7 of the fixed overhead would continue. Determine the total relevant costs to make the part. 2. A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10,000 parts is as follows. Direct variable manufacturing costs $ 300,000 Direct fixed manufacturing costs $ 100,000 Allocated overhead $ 50,000 If the manufacture buys the component, the direct fixed manufacturing costs can be reduced by 35 per cent. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making? 3. Lido Products produces two products (A and B) from a joint process. The joint cost of production is $80,000. Five thousand units of Product A can be sold at split-off for $20 per unit or processed further at an additional cost of $20 000 and sold for $25 per unit. Ten thousand units of Product B can be sold at split-off for $15 per unit or processed further at an additional cost of $20,000 and sold for $16 per unit. What is the difference in profit if Lido decides to process further Product B, instead of selling it at split-off? 4. Allison is contemplating a job offer with an advertising agency where she will make $54 000 in her first year of employment. Alternatively, Allison can begin to work in her father's business where she will earn an annual salary of $38 000. If Allison decides to work with her father, the opportunity cost would be? 5. SWIN Ltd manufacturers a number of specialised electronic components, including ALPHA Sensors. SWIN Ltd has the capacity to produce 10,000 units of ALPHA per year. Currently it is operating at 80 per cent capacity. The selling price for ALPHA is $100 per unit. The variable cost per unit is $37. Fixed cost allocated to producing Alpha is $100,000 per year. SWIN Ltd receives a special order for 3,000 units of ALPHA. The opportunity cost associated with taking this special order is? 6. A firm produces products X, Y and Z with contribution margins of $4, $5 and $10 respectively. The firm has only 5000 machine hours available for a particular period. Machine hours required for each of the products are 1, 1 and 4 hours respectively. Demand for the products is 1000 for X, 3000 for Y and 2000 for Z. How many units of product Z should be produced to maximize profit? 7. A firm makes two products, Alpha and Beta. Alpha Beta Sales price per unit $7.00 $10.00 Variable cost per unit $4.00 $8.00 Demand 5,000 4,000 Machine hours used 5 2 The total available machine hours is 10,000. How many of Alpha should be in the product mix to maximize the profit? 8. Alpha Company Ltd makes and sells only one product. The unit contribution margin is $9, and the break-even point in unit sales is 5,287. What are the company's fixed expen
1. ABC Pty Ltd presently makes 20,000 units of a certain part to use in production. The cost to make the part is $20 per unit including $15 in variable costs and $5 in fixed
2. A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10,000 parts is as follows.
Direct variable
Direct fixed manufacturing costs $ 100,000
Allocated overhead $ 50,000
If the manufacture buys the component, the direct fixed manufacturing costs can be reduced by 35 per cent. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making?
3. Lido Products produces two products (A and B) from a joint process. The joint cost of production is $80,000. Five thousand units of Product A can be sold at split-off for $20 per unit or processed further at an additional cost of $20 000 and sold for $25 per unit. Ten thousand units of Product B can be sold at split-off for $15 per unit or processed further at an additional cost of $20,000 and sold for $16 per unit. What is the difference in profit if Lido decides to process further Product B, instead of selling it at split-off?
4. Allison is contemplating a job offer with an advertising agency where she will make $54 000 in her first year of employment. Alternatively, Allison can begin to work in her father's business where she will earn an annual salary of $38 000. If Allison decides to work with her father, the opportunity cost would be?
5. SWIN Ltd manufacturers a number of specialised electronic components, including ALPHA Sensors. SWIN Ltd has the capacity to produce 10,000 units of ALPHA per year. Currently it is operating at 80 per cent capacity. The selling price for ALPHA is $100 per unit. The variable cost per unit is $37. Fixed cost allocated to producing Alpha is $100,000 per year. SWIN Ltd receives a special order for 3,000 units of ALPHA. The opportunity cost associated with taking this special order is?
6. A firm produces products X, Y and Z with contribution margins of $4, $5 and $10 respectively. The firm has only 5000 machine hours available for a particular period. Machine hours required for each of the products are 1, 1 and 4 hours respectively. Demand for the products is 1000 for X, 3000 for Y and 2000 for Z. How many units of product Z should be produced to maximize profit?
7.
A firm makes two products, Alpha and Beta.
|
Alpha |
Beta |
|
|
Sales price per unit |
$7.00 |
$10.00 |
|
Variable cost per unit |
$4.00 |
$8.00 |
|
Demand |
5,000 |
4,000 |
|
Machine hours used |
5 |
2 |
The total available machine hours is 10,000.
How many of Alpha should be in the product mix to maximize the profit?
8. Alpha Company Ltd makes and sells only one product. The unit contribution margin is $9, and the break-even point in unit sales is 5,287. What are the company's fixed expenses?
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